NIT: Steady through the rough times

The uncertain political environment, fears of global recession, changes in interest rates and power shortages, led large capital outflows and low participation in capital markets throughout 1HFY12. National Investment Trust (NIT), the pioneer of mutual funds in Pakistan also had to face these market adversities. The latest result released by NIT shows a slight decline in the performance of its flagship fund, the NI(U)T. Compared to income after tax of Rs3billion in 1HFY11, in 1HFY12 it stood at Rs1.9billion. During the period (1HFY12) the dividend income of NI(U)T grew by 28 percent compared to the same period last year. A sizable contribution to this increase came from the companys holding in Fauji Fertilizer Company Limited (12% of total assets), which doubled its dividends this year. Overall the income from dividends, capital gains and profits from bank deposits stood at Rs1.8 billion in 1HFY12, 28 percent higher than Rs1.4billion in 1HFY11. The increase in income from capital gains is reflecting the increase in average level of KSE-100 index which rose from 10,476 in 1HFY11 to 11,673 in 1HFY12. However despite phenomenal increases in earnings from the above mentioned heads, large unrealized losses from re-measurement of investments classified as financial assets at fair value, and impairment losses on securities classified as available for sale trimmed down profits. The earning per unit of NI(U)T stood at Rs1.45. However after excluding the unrealized losses the per unit earnings stand at Rs2.09. The Government Bond Fund of NIT however posted improved earnings in this half. Despite a decrease in income from government securities, primarily due to the decrease in interest rates, the mark-up from fixed income securities that mainly constitute the National Savings Scheme propped up earnings from operating activities. Chief operating officer, NIT Manzoor Ahmed while talking to BR Research said that "the main reason for the decline in income is the cut in interest rates". He added that the better returns on bank deposits lead to a shift from T-bills to bank deposits". Overall the earnings per unit rose from Rs0.45 in 1HFY11 to Rs0.56 in 1HFY12. NIT income fund also saw improved earnings, where a decline in income from government securities was overcome by increases in income from TFCs, Sukuks and COIs. The fund is optimistic about the future. it is opening new branches in Karachi and is set to deploy the use of ATMs to make investing more convenient for its clientele.

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National Investment Trust
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    earning per unit
(Rs)      1HFY12     1HFY11     change
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NI(U)T      1.45       2.58       -44%
NIT-GBF     0.56       0.45        24%
NIT-IF      0.64       0.48        33%
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Source: KSE notice